TYPES OF

BLOCKCHAINS
OVERVIEW OF BLOCKCHAIN
 The basic application of the blockchain is to perform transactions in a secure network.
That’s why people use blockchain and ledger technology in different scenarios. One can
set up multichain to prevent unauthorized access to sensitive data. It is not available to the
public, and can only be available to authorized entities in the organization. It depends on
the organization which type it requires to choose for their work.
 By using blockchain we can track orders and payments from end to end.
Advantage using blockchain :
[Link] provides greater trust among users.
[Link] provides greater security among data.
[Link] the cost of production.
[Link] Speed.
[Link] and tokenization.
[Link] provides immutable records.
[Link] contracts
Disadvantages using blockchain :
1. Data modification is not possible.
2. It requires large storage for a large database.
3. The owner cannot access the private key again if they forget or lose it.
Real life application of blockchain :
Here is a list of real world problem where we can use blockchain :
4. In a secure and full-proof voting management system.
5. To supply chain management.
6. In healthcare management.
7. Real estate project.
8. NFT marketplace.
9. Avoid copyright and original content creation.
[Link] the personal identity system
[Link] make an immutable data backup.
[Link] of Things
PERMISSIONLESS BLOCKCHAIN

 It is also known as trustless or public blockchains, are available to

everyone to participate in the blockchains process that use to
validate transactions and data. These are used in the network where
high transparency is required.
Characteristics:
• Permissionless blockchain has no central authority.
• The platform is completely open-source.
• Full transparency of the transaction.
• Heavy use of tokens.
Advantages:
• Everyone can participate only requirement is good hardware and
internet.
• Bring trust among users or entities.
• It has a high level of transparency as it’s a larger network.
• Broader decentralization of access to more participants.
Disadvantages:
• Poor energy efficiency due to large network.
• Lower performance scalability.
• Less privacy as many of the things is visible.
PERMISSIONED
BLOCKCHAIN
These are the closed network only a set of groups are allowed to
validate transactions or data in a given blockchain network. These
are used in the network where high privacy and security are required.
Characteristics:
• A major feature is a transparency based on the objective of the
organization.
• Another feature is the lack of anatomy as only a limited number of
users are allowed.
• It does not have a central authority.
• Developed by private authority.
Advantages:
• This blockchain tends to be faster as it has some nodes for validations.
• They can offer customizability.
• Strong Privacy as permission is needed for accessing transaction information.
• As few nodes are involved performance and scalability are increased.
Disadvantages:
• Not truly decentralized as it requires permission
• Risk of corruption as only a few participants are involved.
• Anytime owner and operator can change the rules as per their need.
 Permissionless
Aspect Permissioned Blockchain
Blockchain
Access Control Open to all Restricted access

Decentralization Highly decentralized Variable decentralization

Consensus Proof of Work (PoW) Various consensus mechanisms
Mechanism often used (e.g., PBFT, PoA)
Enterprise solutions,
Use Cases Public cryptocurrencies
consortiums
Privacy Low privacy Higher privacy control
Speed and Slower, limited Faster, potential for greater
Scalability scalability scalability
Moderate security (depends on
Security High security
governance)
TYPES OF BLOCKCHAIN
PUBLIC BLOCKCHAIN
These blockchains are completely open to following the idea of decentralization. They don’t
have any restrictions, anyone having a computer and internet can participate in the network.
• As the name is public this blockchain is open to the public, which means it is not owned by
anyone.
• Anyone having internet and a computer with good hardware can participate in this public
blockchain.
• All the computer in the network hold the copy of other nodes or block present in the network
• In this public blockchain, we can also perform verification of transactions or records
ADVANTAGES
• Trustable: There are algorithms to detect no fraud. Participants
need not worry about the other nodes in the network
• Secure: This blockchain is large in size as it is open to the public.
In a large size, there is greater distribution of records
• Anonymous Nature: It is a secure platform to make your
transaction properly at the same time, you are not required to reveal
your name and identity in order to participate.
• Decentralized: There is no single platform that maintains the
network, instead every user has a copy of the ledger.
DISADVANTAGES
• Processing: The rate of the transaction process is very slow, due to its large
size. Verification of each node is a very time-consuming process. According to
Godefroy, attackers can unilaterally change a public blockchain network if
they control 51% or more of its computing power.
• Energy Consumption: Proof of work is high energy-consuming. It requires
good computer hardware to participate in the network
• Acceptance: No central authority is there so governments are facing the issue
to implement the technology faster.
 Public blockchains also struggle with scalability. As more nodes connect to the
network, it becomes slower.
USE CASES WITH EXAMPLES
Public Blockchain is secured with proof of work or proof of stake they can be
used to displace traditional financial systems. The more advanced side of this
blockchain is the smart contract that enabled this blockchain to support
decentralization. Examples of public blockchain are
 Bitcoin,
 Ethereum.
 Voting: Authorities can conduct public blockchain voting using credibility and
accountability.
 Fundraising: Organizations or projects can use the open blockchain to increase
trust and accountability.
 PRIVATE (OR MANAGED) BLOCKCHAIN
 The easiest way to describe a private blockchain is as one that operates in a
constrained setting, such as a closed network. Additionally, it is a blockchain with
permissions that are managed by an organization. Private blockchains are fantastic if a
privately held firm or organization wishes to use a blockchain for personal use cases.
One can employ the blockchain efficiently and restrict access to the blockchain
network. The company can also specify various network parameters, such as
authorization, accessibility, etc.
 These blockchains are not as decentralized as the public blockchain only selected
nodes can participate in the process, making it more secure than the others.
• These are not as open as a public blockchain.
• They are open to some authorized users only.
• These blockchains are operated in a closed network.
• Inthis few people are allowed to participate in a network within a
company/organization.
ADVANTAGES:
• Speed: The rate of the transaction is high, due to its small size.
Verification of each node is less time-consuming.
• Scalability: We can modify the scalability. The size of the network
can be decided manually.
• Privacy: It has increased the level of privacy for confidentiality
reasons as the businesses required.
• Balanced: It is more balanced as only some user has the access to
the transaction which improves the performance of the network.
DISADVANTAGES
• One of the greatest drawbacks of private blockchain is that it works
against the fundamental principles of blockchain and distributed
ledger technology as a whole.
• Security- The number of nodes in this type is limited so chances of
manipulation are there. These blockchains are more vulnerable.
• Centralized- Trust building is one of the main disadvantages due to
its central nature. Organizations can use this for malpractices.
• Count- Since there are few nodes if nodes go offline the entire
system of blockchain can be endangered.
USE CASES OF PRIVATE
BLOCKCHAIN
With proper security and maintenance, this blockchain is a great asset to secure information
without exposing it to the public eye. Therefore companies use them for internal auditing,
voting, and asset management.
An example of private blockchains is
Hyperledger,
Corda.
• Management of the supply chain: Businesses can use a private blockchain to administer their
supply chain.
• Asset ownership: Assets can be traced and validated using a private blockchain.
• Internal voting is another area where private blockchain is useful.
HYBRID BLOCKCHAIN

It is the mixed content of the private and public blockchain, where

some part is controlled by some organization and other makes are
made visible as a public blockchain.
• It is a combination of both public and private blockchain.
• Permission-based and permissionless systems are used.
• User access information via smart contracts
• Even a primary entity owns a hybrid blockchain it cannot alter the
transaction
ADVANTAGES
• Ecosystem: Most advantageous thing about this blockchain is its hybrid
nature. It cannot be hacked as 51% of users don’t have access to the network
• Cost: Transactions are cheap as only a few nodes verify the transaction. All the
nodes don’t carry the verification hence less computational cost.
• Architecture: It is highly customizable and still maintains integrity, security,
and transparency.
• Operations: It can choose the participants in the blockchain and decide which
transaction can be made public.
DISADVANTAGES
• Efficiency: Not everyone is in the position to implement a hybrid Blockchain. The
organization also faces some difficulty in terms of efficiency in maintenance.
• Transparency: There is a possibility that someone can hide information from the user. If
someone wants to get access through a hybrid blockchain it depends on the organization
whether they will give or not.
• Ecosystem: Due to its closed ecosystem this blockchain lacks the incentives for network
participation.
USE CASE
• Real Estate: Hybrid networks can be used for this industry,
allowing real estate firms to use them to operate their systems and
share information with the public.
• Retail: The hybrid network can be used to improve process
efficiency.
• Highly Regulated Industries: Hybrid blockchains are perfect for
industries with strict regulations, such as the banking sector.
CONSORTIUM BLOCKCHAIN

It is a creative approach that solves the needs of the organization.

This blockchain validates the transaction and also initiates or
receives transactions.
• Also known as Federated Blockchain.
• This is an innovative method to solve the organization’s needs.
• Some part is public and some part is private.
• In this type, more than one organization manages the blockchain.
ADVANTAGES
• Speed: A limited number of users make verification fast. The high speed
makes this more usable for organizations.
• Authority: Multiple organizations can take part and make it decentralized at
every level. Decentralized authority, makes it more secure.
• Privacy: The information of the checked blocks is unknown to the public
view. but any member belonging to the blockchain can access it.
• Flexible: There is much divergence in the flexibility of the blockchain. Since
it is not a very large decision can be taken faster.
• Blockchains created by consortiums are more scalable and secure.
• Additionally, it is more efficient in comparison to public blockchain networks.
• Features clear governing structures.
DISADVANTAGES
• Approval: All the members approve the protocol making it less
flexible. Since one or more organizations are involved there can be
differences in the vision of interest.
• Transparency: It can be hacked if the organization becomes
corrupt. Organizations may hide information from the users.
• Vulnerability: If few nodes are getting compromised there is a
greater chance of vulnerability in this blockchain
• Laws and censorship can significantly impact the effectiveness of a
network.
USECASES
• Banking and Payments: A consortium of banks is a group
working together. They have control over which nodes validate
transactions.
• Research: Data and findings from research can be shared using a
consortium blockchain.
• It is excellent for meal tracking as well.
LAYERS OF BLOCKCHAIN

 The blockchain (or digital ledger) technology is built upon a layered architecture
APPLICATION LAYER

 Provides blockchain-based applications for the end user.

The application layer is the end product of the entire system offering specific
products for the users, i.e., wallet, lending, staking, etc.
 The application layer starts with a smart contract, a programmable code that
governs state transitions. It can function as an escrow, payment channel, or
vault and is known by different names in various ecosystems, like “programs”
in Solana and “chaincode” in Hyperledger. Smart contracts are a frequent
target for hackers, as any critical error in its code can be exploited for illegal
gains.
 Usually, users don’t interact with the smart contract directly. Instead, they rely
on a front end of a Web3 application or an API. The Uniswap website is an
example of a decentralized app combining UI and smart contracts.
SERVICES AND OPTIONAL COMPONENTS

 Amplifies blockchain capabilities with additional features.

The services layer creates Web3 interconnection, removing barriers and

enabling smooth interactions. Optional elements include Decentralized
Autonomous Organisations (DAOs), aiding administration and communication
in networks like Arbitrum and Polygon, but absent in Bitcoin and Ethereum.
Oracles bridge Web3 applications with real-world data on asset pricing, aiding
off-chain computations. Hot wallets store on-chain assets but also serve as
access points, for example, Metamask or Kaikas – a native wallet for Klaytn.
Lastly, block explorers track chain health, helping detect technical glitches and
security breaches and mitigate issues early.
CONSENSUS LAYER
 Set rules for node agreement on the state.

The protocol layer sets the rules for blockchain participation, with the
consensus mechanism being its key component. Consensus ensures agreement
among nodes for block mining and processing and outlines validator
requirements, varying across proof-of-work, proof-of-stake, and other
consensus mechanisms. Propagation protocol broadcasts decisions, while
protocol audits ensure security against threats like 51% attacks.
 Blockchains can be permissioned (limiting access) or permissionless (open to
all). Sidechains, operating parallel to main chains with separate consensus
mechanisms, offer enhanced capabilitiesю An example is the Polygon-
Ethereum relationship.
NETWORK LAYER OR PEER-TO-PEER (P2P)
LAYER

 Provides for peer node interaction.

The network layer enables effective discovery and interaction

among peers called nodes. Typically, a node locates a bootnode,
which scans for available peers and initiates bonding. As
information circulates, it’s safeguarded through a Trusted Execution
Environment (TEE) to maintain integrity. Node session
maintenance varies across networks; for example, Ethereum
employs Recursive Length Prefixes, defining the time nodes take to
locate, authenticate, and share data.
DATA LAYER
 Ensures secure and confident message transmission.

The data layer of blockchain technology is primarily concerned with data storage
and structure. It houses the blockchain, a linear succession of blocks that store
transaction information. Depending on the specific blockchain, the data structure
can range from a simple transaction list, such as the one used by Bitcoin, to a more
intricate structure, like Ethereum’s state trie, which stores contract state information.
 Every transaction is accompanied by a digital signature, a cryptographic mechanism
that validates the control of the correct private key without revealing it, thus
ensuring security. Cryptographic signatures are generated by signature algorithms
such as The Elliptic Curve Digital Signature Algorithm, Rivest–Shamir–Adleman,
and so on.
HARDWARE/INFRASTRUCTURE LAYER

 Provides the necessary capacities to host a blockchain.

Blockchain architecture extends to hardware and infrastructure. In this layer—

In Proof-of-Work consensus protocols—miners and validators operate, with
miners creating new blocks using specialized equipment (GPU, ventilator,
stabilizer) and electricity, and validators running nodes for block mining. As
for data storage, some blockchains opt for third-party decentralized data
hostings, such as Filecoin, IPFS, Arweave, or Firebase, due to capacity
limitations.
BLOCKCHAIN LAYER AS PER
THE SYLLABUS
APPLICATION LAYER
 As we know a blockchain technology is a tamperproof, decentralized, and shared
ledger technology, so there can be multiple applications that can build on the basis of
these features of the blockchain. Some applications built in application layer can
interface with the other layers; therefore, the application layer is on the top of this
layer suit.
 The application layer is the one where a user can code the desired functionality and
build the application for user of the application. Since the blockchain is a
decentralized technology and there is no server involved, the application needs to be
installed on each node. Although there are some instances where blockchain is in the
backend and the applications need to be hosted on a web server and needs a server-
side programming, but it would be good if there were no server involved in the
blockchain network as it would defeat the purpose and benefit of blockchain
technology.
EXECUTION LAYER
 This layer handles the executions of all the instruction that were
performed at the application layer for all the nodes present on the
blockchain network. The set of instruction could range from simple
ones to multiple instructions. For example, smart contract is also
small code that needs to be executed when some funds need to be
transferred form one person to another person. Now if one application
is present on all the nodes of the blockchain network the code has to
be executed independently on all the nodes. In order to avoid the
inconsistencies in the output, the execution of code on a set of input
should always produce the same output for all the nodes present on
the blockchain.
SEMANTIC LAYER
 This layer also called as logical layer of blockchain layer suit. This
layer deals in validation of the transactions performed in the
blockchain network and also validating the blocks being generated
in the network. When a transaction comes up from a node, the set
of instruction are executed on the execution layer and gets validated
on the semantic layer. Semantic layer is also responsible for the
linking of the blocks created in the network. As we already know
each block in the blockchain contains the hash of the previous
block except the Genesis block. This linking of block needs to be
defined on this layer.
PROPAGATION LAYER
 A propagation layer deals with the peer-to-peer communications
between the nodes that allow them to discover each other and get
synced with another node in a network. When a transaction is carried
out, it gets broadcasted to all other nodes in the network. Also, when
a node proposes a block, it will immediately get broadcast in the
entire network so that other nodes can use this newly created block
and work upon it. Hence, the propagation of the block or a transaction
in the network is defined in this layer and ensures the stability of the
complete network. However, depending upon the network capacity or
network bandwidth sometimes the propagation could occur instantly
sometimes it may take a longer.
CONSENSUS LAYER
 This layer is the base layer for most of the blockchain systems. This main
purpose of this layer is to make sure that all the nodes must get agree on a
common state of the shared ledger. The layer also deals with the safety and
security of the blockchain. There are many consensus algorithms which can be
applied for generation of cryptocurrencies like Bitcoin and Ethereum, they
uses proof-of-work mechanism to select a node randomly out of various nodes
present on the network that can propose a new block. Once a new block is
created, the block is propagated to all the other nodes to check if the new block
is valid or not with the transactions in it and based on the consensus from all
other nodes the new block gets added on to the blockchain.
HOW TO ADD THE BLOCK IN THE
BLOCKCHAIN
 PROCESS FOR ADDING NEW
BLOCK IN BLOCKCHAIN
 New blocks are added to a ledger in a blockchain through these steps:

 Transaction Validation: Transactions are validated for correctness and

funds availability.
 Transaction Pool: Valid transactions wait in a pool to be added to a block.

 Block Candidate Selection (PoW): Miners select and assemble

transactions into a candidate block.
 Proof-of-Work (PoW) Mining: Miners solve a complex puzzle, and the
first to find a solution adds the block.
 Consensus and Block Addition (PoW): Network agrees on the solution, and the block
is added, referencing the previous one.

 Transaction Confirmation (PoS): Validators confirm transactions in the candidate

block (PoS).

 Block Addition (PoS): If validated, the block is added, following the blockchain's
structure.

 Block Reward: Miners/validators are rewarded with cryptocurrency for their work.

 Block Propagation: The new block is shared with all network nodes.

 Confirmation and Finality: Transactions are considered final after a certain number
of subsequent blocks, ensuring security and immutability.
BITCOIN V/S ETHEREUM
Aspect Bitcoin Ethereum

Primary Purpose Digital Currency Decentralized Smart Contracts

Blockchain Technology Simplified Blockchain Versatile Blockchain with EVM

Smart Contracts Limited support Robust support for complex smart contracts
Decentralized Applications (DApps),
Use Cases Digital Gold, Payments
Tokens, ICOs
Supply Cap Capped at 21 million Uncapped, with ongoing issuance
Transitioning from PoW to Proof of Stake
Consensus Mechanism Proof of Work (PoW)
(PoS)
Decentralized applications and smart
Development Focus Peer-to-peer transactions
contracts
Original Creator Satoshi Nakamoto Vitalik Buterin